NZX: The new Central Planning Agency - Reporting on Women.

* I would draw attention to the important new UPDATE 2 at the end of this post, regarding letter to Press from University of Canterbury Professor of Finance, Glenn Boyle. Based on the Professor's word, the board of the NZX should be looking closely at their own chairman. (Perhaps time for a woman to take the helm, lads).

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Again I say it: the single most important aspect of laissez faire capitalism that I champion, is that evolutionary pinnacle the civilised society is hinged on: the voluntary transaction. And one of the important features of capitalist markets is that clearing house which allows investors to shake hands with entrepreneurs, to form voluntary relationships that increase the living standards and opportunities, ultimately, of all of us: the stock exchange. So what is NZX Chairman Tim Bennett doing here:

Listed companies will have to tell investors how many women they have in their senior ranks, the NZX has decided.

The stock exchange operator is adopting a gender diversity rule – still subject to FMA approval – after consulting with listed companies earlier this year.

Essentially, it is a voluntary code for gender disclosure, similar to that governing Australian-listed companies from January last year.

It means the number of women on a company’s board and in senior management positions will need to be outlined in the annual report of listed companies with a balance date on or after December 31, 2012.

I have no idea of Bennett’s background, though it would not surprise me to find some government bureaucracy or other features in it, but I want the directors of any company I invest in to be there on merit, not on gender. How soon until the NZX, according to the central planning motif it has taken on itself, decides that ‘other’ handicapped groups have to be reported on also. My wife sometimes calls me a big whiny girls blouse, but if I was a woman I'd be feeling slighted by nonsense like this. Bennett's reasoning is that women in boardrooms leads to improved performance, as well it might, however, pets in retirement villages are proven to be beneficial, also, thus is Ryman soon going to have to appoint, and report on, the pooch. And what about fat directors: how can they possibly pull their weight when we all know they're only thinking about eating all the time, plus they're a key-man insurance liability: perhaps we should be reporting the weight of the boardroom also? Oh no wait a minute, that'll scare all the women off again.

It’s about voluntarism, boys and girl. Who companies listed on the exchange decide to put in the boardroom is none of your damned business: it's solely in the province of the shareholders. And don’t, for a minute, think this new central planning agency isn’t going to make the leap of faith, like the politicians have, to compulsion to foist on us all the great ideas for man’s betterment they think they have in their heads.

“However, it is important we give our listed companies the flexibility to make their own decisions about whether a formal diversity policy is a priority for them at this stage.

Note that last bit: ‘at this stage’. Are we going to put this one into the accounting standards also? No matter how good an idea you think this might be, Tim, and no matter how good an idea women in the boardroom is, this policy will never be a good idea. Can you understand that? You are a stock exchange. Leave the social engineering and arrogance to that centre of incompetence in Wellington. Put her to bed, mate.

What’s it called again: capitalism? I’ll be buggered if I can find it anymore. Where did it go to then? Can anybody see it anymore? And what the hell has happened to us!


UPDATE:

Just copying a mini-rant from my comment to Richard below: What is Wrong with NZX (is what is wrong with our social democracies):

  Capitalism: RIP, it was good while it lasted, even though largely before my time.

...  Um, a little mini-rant coming on: the other thing is the NZX is a sick puppy. There's a dearth of new listings, that's the real problem with it; entrepreneurs in NZ (Charlies, etc) tend to sell their businesses when they are otherwise getting to the size to list ... why?

I bet regulation plays a big part. It's expensive to list, to stay listed, as a firm you lose your privacy to a public so molly coddled by Nanny State it doesn't understand risk, making a direct route from directorship to jail; there's paperwork and regulation galore, including having to put up with this type of BS. So why would you want to list? I own shares in no NZX companies (indeed, no shares, period, given the wind down of crony capitalism which has been a long time in the making). Further, even though I operate on a miniscle scale - I'm not even interested in employing while the government expects the employer to be every employees wet nurse - we still dropped our biggest client last year, and we will probably scale back more this year, to a living wage only that keeps us comfortable and provides for old age, but otherwise allows as much time doing my own unpaid 'thing' as possible. I'm over the monster we've created in our social democracies; as I said in my "End of Classical Liberalism' post last month, it only gets worse in my lifetime, not better, so as much as possible I'm opting out to smell the roses and murder little fish ... well no, legal sized fish, of course.

UPDATE 2

The below is a letter copied in it's entirety from today's (9 July) Christchurch Press - hard copy. I hope by making this attribution I'm breaching no copyright, however, this letter remains too important to relegate to a regional publication. Based on this I suggest the NZX may well want to review the performance of its own chairman.


Letter follows from University of Canterbury Professor of Finance, Glenn Boyle:

Your (Press) July 6 leader repeats the NZX line that its proposed gender-diversity reporting rule is justified by credible research evidence showing that firms with greater female representation have superior financial performance.


The studies wheeled forward to support this claim were undertaken by consultancies, and so qualify neither as credible nor as research.


They also fail to distinguish between correlation and causation an equally plausible interpretation of their 'evidence' is that firms which had performed strongly in the past succumbed to hubris and started appointing women willy-nilly.


In fact, the only credible research on the matter finds that, by forcing their boards to engage in too much costly monitoring, high female director representation actually harms the performance of otherwise well-government boards.


There may well be many good reasons for the NZX rule change [I disagree - per above], but the existence of convincing research evidence certainly isn't one of them.